Insure against redundancy

Rocketing redundancies – two million by Christmas and many economists are predicting a possible three million by the end of 2010 – have brought into sharp focus the wisdom of taking out insurance to cover the frightening prospect of losing your job.

Iconic names such as Woolworths and MFI – frightening predictions that 70,000 jobs could disappear in the Square Mile and Canary Wharf – the news gets worse and the casualties keep mounting up. Redundancy can have devastating consequences. It can result, of course, in the terrifying prospect of having ones home repossessed.

Eva Financial, of Welling, in Kent, is a specialist house which is expert in redundancy insurance. To get a £1000 worth of cover of cover every month costs about £35 a month. Although there are special introductory offers available which can halve the premium. More about that in a moment.

So who can get them? Redundancy insurance policies are available to the employed and self-employed. The policies pay an income if somebody is unfortunate enough to lose their job. Most of the polices are for a year – but two-year policies are also available. There are no early repayment charges so the policy can be cancelled at any time if, for instance, the policy holder is lucky enough to suddenly find another job.

There are certain stipulations with which applicants must conform. Redundancy policies are only available if the applicant has a mortgage and the payments are up to date. Applicants must have been in work for a minimum of six months and not currently under the threat of redundancy.

The last bit raises an interesting point. Nobody’s job is safe today. You might think you are in a secure position – but being realistic, and without wishing to add to the already widespread alarm, the Great Crash is spreading like a contaminant through every sector. So if you’re in work – and even if you think you’re safe as houses ( no joke intended) - if you’re considering such a policy it’s worth acting swiftly before the unexpected happens.

As with so many other aspects of the financial sector there’s a tightening up which is beginning to happen across the board.

Legal & General announced on November 26 that with immediate effect redundancy only policies can now only be taken out at the time of a new mortgage application. There is a possibility that as unemployment grows other companies will follow L&G’s lead. The cost of getting cover might also rise as unemployment soars and the insurance companies are faced with having to pay out on more and more claims.

Such factors – once again – underline the importance of prompt action by people who are in a position to consider these specialist policies.

Redundancy can trigger an appalling chain of events. Perhaps the worst is the loss of ones home. Many people don’t realise that if they lose their home there’s an awful rigmarole to endure before a local authority will help them.

Imagine this: you’ve lost your job, pride, dignity, you’re shell-shocked, you can’t think straight and you can’t keep up with your mortgage repayments. Your home is repossessed. It doesn’t matter what pledges the government is giving. It doesn’t matter that they’re imploring mortgage lenders to be more compassionate. Repossessions are happening now and at a frightening rate. In all the turmoil one thought burns bright. What’s going to happen to you and your family? Where on earth are they going to live?

To get council help you have to meet a range of qualifying standards. You have to prove that you’re homeless.

You will need to supply proof of your predicament, court-papers and the like. Unless there are special circumstances you have to prove that you were not in arrears before you were made redundant. You must have children or suffer from a disability. You have to have lived in the borough for six of the last twelve months, three out of the last five years, or have a close relative living in the borough for at least five years.

Such misery could be avoided for about £1.15 per day.

So what about the cut price introductory rates? Alex Francois, a principal of Eva Financial, quotes the case of a woman who worked in a high street bank who was convinced that she was in a secure job but wanted to be on the safe side .. just in case.

She took out a policy for just under £900 a month for a monthly cost of £33.99. However, as she considered herself low risk the company was able to offer her the policy ‘free’ for six months. This was the equivalent of £17 a month. And guess what? The worst scenario came true. Mrs.Safe-as-Houses-Banker was made redundant. Even though she was still in her ‘free’ period the insurer coughed up and she now receives just under £900 a month.

For more information on redundancy insurance or a quotation please click here or call Eva Financial quoting TheLettingSite.co.uk on 0208 304 0755.

Too Little Too Late

The latest news that the government is to stop closing job centres and, indeed, is to employ another 6000 people to man them to cope with rocketing unemployment, encapsulates rather neatly the dilemma which faces the administration.

All those centres – vital though they probably are - will have to be manned by people who are on the public payroll, at the very time that the government is trying to cut back on public spending. Perhaps those jobs are important; but what about all the other crazy jobs in the public sector that are paid for by the taxpayer? More about this in a moment.

The government’s desperate measures to stop recession turning to slump and then deflation are too little and too late. The idea that consumers will help Britain spend its way out of trouble by simply knocking 2.5 per cent off VAT will not make an iota of difference to consumers who either haven’t got any money to spend, or are terrified of the future and determined to hang on to the little they have, or who have become so used to offers of 25 to 50 per cent off everything that 2.5% seems laughably infinitesimal.

The property market needs a real fillip. And it was not in this package. One way of getting some movement would have been to abolish stamp duty altogether. And especially for first time buyers. That would have been really radical and adventurous.

Neither was there any word of encouragement for hard-pressed landlords of rented properties who are vital in making up the shortfall in housing and accommodation. And not one sign of real or daring invention – bringing back tax relief on mortgages for instance – which was mooted in TheLettingSite.co.uk articles very recently.

As for taxing the rich… what about those people who don’t pay a penny of tax in the UK, the multi-millionaires who prefer to salt it away in sunny tax havens – sheltering their wealth behind foreign-based companies and putting assets into their relatives’ names?

The foreign-based tax-avoiders are always quick to lecture the country about what is needed. But why do they keep hiding away in Britain’s hour of need? The immediate closure of such tax loopholes is vital. Going after the very rich should have started immediately. It might be the politics of greed and envy. So what? It would have been a big morale booster for the rest of the nation which has already had to bail out the City and is going to be pressed so hard in the future by tax hikes of unimagined proportions.

Interestingly, the real worry is that people on £40,000 a year are going to be clobbered. In other words – middle England is once again going to be the real milch-cow, the absolute loser in all this. The way that Darling has done this is by raising national insurance by a half-point. It’s estimated that people on £40,000 will pay an average of £3 a week extra – and this should swell the national purse by about £500 million.

People on £100,000 a year will have their personal allowances chopped in half. Anybody on more than £140,000 will lose them altogether. In 2011 somebody on £150,000 will pay another £3000 a year in tax. About £60 a week. Ah didums! If they’re on £200,000 they’ll pay another £5000 a year. About £100 a week. Breaks your heart doesn’t it?

Already a motley assortment of accountants are bleating about Britain no longer being seen as the alluring place it once was for foreign investors. Oh horror of horrors! The red flag of blood-red Socialism is once again flying over Downing Street. What utter piffle.

If the foreign investors don’t like it why don’t they go and have a look at somewhere like Dubai, for instance, where the great property boom – which attracted the celebrity likes of Beckham and Schumacher - is now suddenly knee-deep in the unmentionable.

This is not a crisis restricted to Britain. It’s world-wide. And there’s still hardly a corner that could match the stability and maturity of the UK – certainly not somewhere like the United Arab Emirates – touted so recently as the smartest place to park ones loot. OK. So the UK’s taken a battering. But where hasn’t? It could be worse. It could be Iceland.

Now to the thorny question addressed at the commencement of this article. Namely, one wonders if the reduction in public spending by a chunky £12 billion – and remember, it was only eight months ago that Darling set out his state spending plans – will result also in a cut back in the number of ludicrous state jobs which accompany public works?

A glance at the public sector jobs still being advertised in The Guardian every week gives a clue to the lunatic salaries and unbelievable pensions that are still on offer for often bizarre, politically-correct appointments. Virtually half the working population is now on the public payroll. So when are Brown and Darling going to do something about them?

The problem is that if the government culls its employees it will A) lose their votes and B) have to pay them redundancy money and still honour their pensions. So whatever happens – if they retain their jobs, or if there are cut-backs – the taxpayer, all those poor devils flogging themselves to death in the private half of the economy, will still lose out.

The only thing that is certain about the crash and how to survive it is that Britain is now seriously in the red – up to its gunnels – and that Brown and Darling have taken a massive gamble with our money. The big tax bill will be due in 2011. That’s after the election. So if Cameron gets in – the chalice will be well and truly poisoned.

Websites Hit Newspaper Property Advertising

Regional newspapers which drew revenue from property advertising have been hard hit by web sites. Some local newspapers which have been heavily dependent on advertising which is focused around flats and houses to rent or buy, and which are aimed primarily at attracting tenants, landlords, and estate agents, face financial difficulties. Newspapers are having a parlous time as landlords and agents grow more canny and demanding and as Web property portals become more sophisticated in luring landlords, agents and tenants.

Local newspapers have suffered a triple whammy as car and property sales have collapsed. Websites carrying fewer staff, lower fixed overheads, no printing or newsprint costs, no distribution costs and which are not reliant on the vicissitudes of Britain’s railways, can offer advertisers world-wide exposure and cut-throat advertising rates.

Many regional newspapers produce weekly car and property supplements which in some cases had become financial pit-props. But the supplements have been savaged by the crisis as advertisers switched to the Web. Property people know the value of their advertising to newspapers and as the crisis has deepened their demands have intensified.

A high-level source in a top estate agency, who asked not to be identified, admitted that groups of estate agents in provincial towns would sometimes act in concert to drive down rates in their local newspapers – knowing how dependent the papers are on their continued support. Estate agencies – as well as newspapers - are fighting for their life. An estimated 15,000 estate agents have lost their jobs – and it could double by next year.

Regional newspapers have been closing down or reporting poor figures at an alarming rate. The Daily Mail group is expected to make redundancies in its national and regional titles. Johnston Press and the Trinity Mirror group have reported dire news.

All conventional media outlets dependent on advertising face difficulties. ITV shares are at rock-bottom – takeover rumours abound – and boss Michael Grade has announced big redundancies and wants to junk public service broadcasting. Commercial radio has undergone takeovers, redundancies, and a massive reorganisation in sales and output. It is having to fight hard to retain market share and advertising revenue.

In newspapers it is not only provincial titles under pressure. The Independent group is making 90 redundancies. It had talks with Zac Goldmsith – son of the late controversial James Goldsmith – but the discussions ceased. It was reported that Goldsmith – rich though he is – and his socialite sister Jemima Khan – were too shrewd or did not have pockets deep enough to get embroiled in the troubled Independent group.

Newspapers used to be able to look forward to advertising revenues being bolstered during the bleak post-Christmas period by retail chains promoting their Xmas sales.
They are especially important now with newsprint – always a source of angst for the newspaper industry - due to rise in cost by 20 per cent early in 2009.

But snap High Street pre-Christmas sales are running now. Customers have become so savvy they expect to find sales and bargains all the year round. Newspapers are waiting anxiously to see if the High Street chains will commit to their usual post-Yule advertising splurge. And even if they do – retail bosses will try to cut advertising rates to the bone.

Landlords with properties to let – and tenants looking for flats or houses to rent – have switch to Web sites in droves. Existing householders unable to sell their properties are now trying to rent them out. The ‘amateur’ landlords look for the cheapest advertising deals and often end up favouring the web. Thelettingsite.co.uk offers completely free advertising to tenants looking to rent and landlords and agents looking to let properties.

With unemployment rising and people moving to different parts of the country to seek work the Web has a major advantage over local papers. At the click of a button users can scan flats or houses to rent anywhere in the country – often with a gallery of photographs.

Amid a sea of gloom there has been a bit of good news for the regional press. BBC trustees have rejected a £68 million plan for a network of local video news websites which would have further damaged Britain’s once proud and thriving local newspapers.

Bright Sparks in British Gas

British Gas seems to have to money to burn. To say nothing of acting in an astonishingly dim way. Spies in north London tell TheLettingSite.co.uk that it has delivered four free light bulbs by way of a rather peculiar thank you to some of its lucky customers.

In a sweet little note signed by the MD Phil Bentley British Gas says it’s sending out 52 million light bulbs ‘ to light your way.’ And it goes on with some tripe about ‘ every journey starts with a few small steps.’

They are those truly terrible bulbs which take ages to warm up and are supposed to be nice and Green and we can, ahem, help save the planet by using them. As the late lamented great hack Sir John Junor used to say, Pass the sick bag Alice.

The bulbs arrive in a nice box which is super strong – always wise with bulbs – and they are delivered at great expense to ones’ door. Bulb fanciers who know about such things reckon they would cost about £1.95 for any poor pleb who had to actually buy one on the High Street.

So for the sake of argument let’s call it a couple of quid for each bulb - £8. Then there’s the cost of the postage and carriage and distribution and all that stuff. And don’t forget all the lovely printing and packaging and the little love-letter telling you how appreciated you are for letting British Gas look after all your electricity needs as well as how using the dull bulbs will reduce the carbon footprint etcetera etcetera.

Imagine the size of the footprint that’s been created making and delivering this lot?

What else to add in? The bulbs were probably knocked up overseas. So there’s probably the cost of air freight. It all adds up nicely. Especially if you multiply all that by 52 million. Although it comes in at such an amazing figure that we’re beginning to think there must be, as Private Eye might say, surely shum mishtake.

British Gas shareholders will be euphoric to know there must be a light-bulb dreamer-upper and perhaps a committee saying what a wheeze and, presumably, a bulb tester? Perhaps a testing department? After all BG wouldn’t want to dispense bulbs that don’t light up or whatever it is they don’t do. It’s enough to make shareholders blow a fuse.

We think these Bulb Bosses should stop hiding their light beneath their bushel. Why don’t they step out of the shadows for a round of applause? British Gas might even hold a congratulatory party for them at which everybody could get well and truly lit up.

Special note to the bright spark who dreamed this one up – and the super bright spark who approved it: Wouldn’t it be more impressive to knock a few quid off the bills?

Squeezing the Rich

The Great Crash has started to hit those who thought they were sitting pretty and exempt from the shock waves. The argument used to be that the quite obscenely rich
would always be insulated from the trials and tribulations which hit lesser mortals.

So if you’ve got priceless paintings on your wall – the odd Damien Hirst pickled cow greeting visitors – your cellar stuffed with fine wine and your wife used to sporting diamonds as big as plovers eggs – you’d still be, as one used to say, as safe as houses.

But not anymore. Art – especially the contemporary stuff – has gone off the boil in a big way. At some big time auctions lately a number of offerings, horror of horrors, have actually failed to reach their reserve. Art had been turned into a market – with everything judged in monetary rather than creative terms – so a crash was inevitable.

Does it really matter? Not really. The art being sold was hugely over-valued. It had become such a bizarre and vulgar market, driven by advertising people and their ilk,
that most buyers might just as well have framed the cheque and hung that on the wall.

And high class plonk? Reports are coming in from across the world about its falling value. Cellars are being turned in to bomb-shelters. It’s probably better to guzzle the lot. It might help blot out how awful the real world has become. Supermarkets report that sales of their better wines – anything over a tenner – have also tailed off.

There is a smidgeon of good news. Sources in Somerset report that police are trying to cope with a marked rise in cider apple scrumping, there has been a big leap in sales of home-made nettle wine, and in the Glasgow area several stills have been discovered.

People who make high-class handbags, jewellery, champagne, shoes with heels so high they’d give you vertigo – the sort of stuff bought by Celeb types, IT girls and WAGS – all species of which are quickly running for cover for fear of causing riots among the unemployed – are in trouble. Even Abramovich has made big cut-backs at Chelsea.

A psychiatrist in Germany said: “ For most people knowing that the really rich are beginning to hurt is a morale booster for ordinary people. So their plight is good news for most of us. Schadenfreude becomes evident in straitened times.”

As for sparklers - the boss of the World Diamond Centre in Antwerp – was gloomy. But he hoped the price of top quality rocks would hold up. The lesser stuff was predicted to fall in value by up to 40 per cent. It would be intriguing to know what Hirst’s pitiful diamond-saturated skull might be worth, or not. The real problem is that you can’t eat diamonds. Oh, and the price of quails’ eggs are in freefall as well …

Not So Fast Darling Tells Rock

People seeking mortgages and new deals should benefit from the latest moves which are thought to be taking place behind the scenes at the Treasury.

The mad dash for cash by the newly-nationalised bank Northern Rock – which has led to repossessions and accusations that it’s acting in a way which is precipitous and stony-hearted – is believed to have irritated Chancellor Darling to such a degree that he now wants to change the rules governing the public monies which were injected into the Rock.

Stricken Northern Rock had £11.5 billion of tax payers money pumped into it and was instructed to pay it back to the government as quickly as possible. It was agreed that 2010 would be the deadline.

To meet the deadline the bank has been encouraging its customers to take their business elsewhere – to remortgage with other banks and lenders.

Consequently the cash has been pouring back into Northern Rock. It’s already repaid more than half its loans. But remortgaging by its customers has skewed the market.

There are still only a limited number of suitable deals being made available by other lenders – and former Northern Rock customers have been sucking them up.

Darling thinks that if he tells Northern Rock to take it steady – it’s still got plenty of time to meet its deadlines – such a move would have a helpful and stabilising effect on the beleagured property market.

But to make changes to the original terms of the loan agreement Darling needs to get permission from Brussels. Such changes would win plaudits from City based property strategists and analysts. It is estimated that customers of the Rock are swallowing up over £2 billion worth of mortgage loans which its competitor banks are currently offering.

Mortgage Tax Relief on Residential Property

How can the property market be stimulated? Two ways would be to look again at stamp duty and to bring back that which the Labour government scrapped: mortgage tax relief.

Property prices have fallen between 12 and 14% since their high in 2007. Housebuilders throughout the land are facing extreme difficulties. Buy to let landlords must also be encouraged to make up for the disastrous short-fall in the housebuilding programme.

With more people being chucked out of work – and homes being repossessed because mortgagees can’t keep up with mortgage payments – where are they and their dependents going to be rehoused? Answer: in buy-to-let accommodation.

But buy-to-let landlords have been seriously discouraged because their rents and returns are in danger of not keeping up with their mortgages and their other outgoings.

The stamp duty threshold was eventually raised from £125,000 to £175,000. But it’s done little to give the market any sort of real fillip.

Before the threshold was raised Darling messed up by talking about a stamp-duty holiday and then failing to make further any pronouncements.

The slowness turned an icy market glacial with putative buyers delaying to see if they could get away without having to pay duty. Dithering and rash announcements can be costly in the property market.

Why not chop the punch-in-the-mouth system whereby buyers must pay an extra 2% in stamp duty on the entire amount if the price is so much as one pound above £250,000?

It’s a heavy-handed and crazy system which blocks off a segment of potential buyers who won’t even look at something costing a halfpenny above £250,000.

If you have to have stamp duty at all – and anyway, aren’t we supposed to be looking for genuinely radical ways to give a real stimulus? – then a gently graded system would surely be preferable and rather less clunky.

But could it be done without adding yet another layer of government bureaucrats to administer it? The answer to that is a most definite Yes, as long as common sense is allowed to prevail, and not political or government dictate.

As for mortgage relief – in the past basic rate relief was allowed on mortgages up to £30,000. Relief was then cut to 10% and was eventually done away.

Times have changed of course – not least the size of the mortgages which buyers have to commit to. Mortgage tax relief would give a big boost across the board – but it could certainly be aimed primarily at first-time buyers.

To have any real effect – unlike the ineffectual tinkering with stamp-duty – it could be levelled at between 20 and 25 per cent for first time buyers, and perhaps rather less for those already in the market who are part of growing throng facing repayment difficulties.

There is just one snag. First-time buyers still have to drum up a hefty deposit and then find an affordable mortgage on attractive terms.

Lettings Market Bouyant

Residential lettings are taking off according to leading estate agents. The sales side of the business is under intense pressure – it’s estimated that 7,000 estate agents have lost their jobs – but the lettings and renting business is thriving.

It’s estimated that 15,000 estate agency jobs could go – with worst reports suggesting that house sales have fallen by 50 per cent – but The Times newspaper has carried reports quoting spokesmen for Savills and Foxtons saying lettings are buoyant.

Savills won’t confirm how many estate agents and surveyors they have let go. But it’s known to have closed one office outside London and other closures are being considered.

Jeremy Helsby, Savills chief executive, is quoted as saying Savills is seeing strong growth in lettings.“ There is a new breed of people renting with people who have sold their properties sitting on the fence hoping values will fall further.”

There have been rumours in the profession about the vulnerability of Foxtons – sold when the market was at its peak for £360 million by its founder – because of its high levels of debt. Its new owner, BC Partners, the private equity group, is reported by The Times to be in talks with the bankers who funded the deal by putting up £250 million.

But an anonymous source was reported by The Times as saying Foxtons has enjoyed strong growth in its lettings business.

Upmarket Humberts estate agents collapsed in the summer and Halifax has closed 50 of its estate agencies in the UK. Other smaller firms have collapsed or joined in mergers.

No Hiding Place

If there are any letting landlords or owners of residential and commercial property who are hiding their funds in offshore accounts to keep them away from the prying eyes of
the tax man .. watch out .. he’s after you.

A new crackdown on offshore tax avoidance schemes and accounts is being made by HM Revenue & Customs. Property people are not its only targets. It wants to catch anybody who’s trying to get with it by hiding undisclosed assets and monies in faraway places.

The tax man is on the tail of thousands of British based savers who have kept their overseas accounts secret to avoid paying their dues.

It’s a fresh attack on the overseas tax-dodgers and the Revenue is sending out more than 50,000 warning letters to people who live in the UK.

In serious cases the would-be tax avoiders will be prosecuted and could be looking at punitive penalties.

Revenue and Customs won an important legal victory last year which forced the big banks and lenders like RBS, Barclays, Lloyds TSB and HBOS to disclose details of nearly 500,000 customers who had offshore accounts.

For people who volunteered the information – who owned up and came clean - the tax man promised a cut-price incentive: a levy of just 10 per cent would be imposed on top of the tax and interest which was due.

But if dodgers continue in trying to hide accounts or lie about how little is in them - then they could face stiff penalties.

So many people have already owned up that the Revenue has collected £400million.

Last year – out of a sample of almost 500 offshore accounts held by UK residents – the Revenue discovered that on average of £16,000 in liabilities was owing Some examples were much higher.

Under this latest crack down it’s thought that tax offices throughout the country are supplying HM Revenue & Customs with intelligence about individual accounts and furnishing it with the special numbers of the accounts.


Pictured above - St.Moritz.

Darling's Dilemma

The Chancellor is on the horns of a dilemma when he presents his pre-Budget Report this month. He has to try and quicken recovery from the recession as best he can . But he also has to show that he’s got public spending under control. The much vaunted policy of prudence talked so much about by Brown in the past has long been in tatters.

If he’s to stimulate growth he will try to spend his way out of trouble with a programme of big public spending commitments of one type or another. This will provide a necessary fiscal boost and will almost certainly entail cutting taxes – which is now being demanded by all three political parties – and represents a total about face for the Liberals.

But again the question of where he finds all this extra money is drawn into sharp focus. There must also be a day of reckoning when debts have to be repaid. And if he wants to prove that public finances are not out of control he will have to consider a squeeze on spending and raising taxes: a thorny dilemma to which there is no easy solution.

The slashing of interest rates by the Bank of England gave a potent clue about the likely depth of the recession. As the economy slides tax returns the Chancellor and Treasury could have expected diminish, while at the same time there is an increasing demand on the public purse due to such considerations as the rise in unemployment benefits.

One wonders how much more Darling can afford to give away. He’s already put off increases in car tax. And can one blame him given the opprobrium such a move would trigger among the electorate and the parlous, indeed perilous state of the worlds car industry, impaled on the twin spears of both Government measures and Green lobbying.

In the mayhem it’s easy to lose sight of the electorate. How many votes would Labour lose if it appeared to clobber rather than help the electorate during its hour of need?

Brown’s standing has been enhanced by his major recession-surgery . He now has a greater standing on the world’ stage. He can, to a degree, claim plaudits for prompting European and other leaders into taking remedial action involving state bail-outs.

And yet, though his lead has been cut, Cameron remains a dozen points clear in the polls. There are many quick to remind the government that Brown should not be absolved for his part in the Great Crisis.

Brown’s party was in power; he was the Chancellor who presided over what is now seen as the birth of a vehicle with a dangerously powerful engine, which was propelled by greed, driven by mad bankers, and which had no brakes and bald tyres. It was a major car crash waiting to happen and it was inevitable that Brown’s Prudence would fall victim to what, with the benefit of hindsight, is a spectacular case of financial hit and run.

Given that politicians always have at least one eye on the ballot box - in the short term it is reasonable to expect that there will be a big giveaway in the coming months. Cuts in tax, perhaps a reduction in VAT, suspension of stamp duty and so on.

There are also likely to be more cuts in bank rate. Many economists are predicting that the rate could fall rapidly to two or one per cent. Others speculate that zero rates might come in. Such low levels will take Britain into unknown and even trickier waters.

There is still no guarantee that the banks will pass on any further rate cuts to hard-pressed businesses – especially the smaller ones, let alone the new start-up enterprises which have always been of such immeasurable promise and value to the economy – or to mortgagees.

Indeed, most of the banks have already given a big fat No to the suggestion that if the BoE rate dips further that they will pass on anymore cuts to the real economy.

Before Darling and Brown waved the big stick the bankers were brazen and hard-nosed about passing on the 1.5% cut. They will have another battle to persuade them once more to think about the national interest rather than just themselves and their shareholders.

In the longer term – whether it’s Brown or Cameron who gets in – the big giveaways will at some point have to cease. Expect public spending to be cut and taxes to rise. It is not a happy prospect for anybody. And one does not envy Darling’s dilemma.

High Street Blues

There’s a distinct chance Britain’s high streets will look like ghost towns after the recession. New shopping centres in Britain – the equivalent of eight Bluewaters – will open over the next few months. They are certain to worsen the gathering storm.

Accountants PriceWaterHouseCooopers reckon another 3,600 retail outlets could fall vacant if just ten per cent of national retailers have difficulties over the next year, a scenario made worse by the continued growth and popularity of on-line shopping.

Thirty retailers have gone into liquidation this year – including DIY giants MFI, shoe chain Dolcis and furniture supplier Rosebys. Sometimes chains survive by slashing outlets – such as Jessops the photographic group which has closed over 80 stores.

Previously the once thriving service sector would have reduced the slack – especially coffee chains. But even coffee is looking costly. Demand has been falling – especially with a cut-back in City workers - and expansion plans put on ice.

Giant new shopping developments – where tenants who signed up months before the developments came on steam - have no choice but to put on a brave face. Such developments include the likes of the new Westfield centre at London’s White City – already dubbed White Elephant centre by some - and Bristol’s Cabot Circus.

Big retail chains – especially in fashion and clothing – expect a blood-bath at Christmas.

Jewellers could be in for a rough time. Recent reports suggest that the recession is now beginning to bite at the top end of the non-essential sector. Jewellery outlets in places like Canary Wharf could be hit. Thousands of city jobs are being scythed and the bonuses which bought the baubles are being scrapped – though not quickly enough for many.

There is a sense that in straitened times people don’t want to appear flash or showy in their spending. The celebrity culture now looks more vulgar than ever. As the recession deepens, and the dole queues lengthen, it’s smart to be modest, to make do and mend.

Retail margins across the board will be slashed to the bone and the competition in every sector – especially non-essentials – will be ferocious.

West End shops in London with colossal fixed overheads and wage bills are expecting developments such as that at White City to further siphon off their trade.

The cost of getting to London for out of town Christmas shoppers is beyond the reach of people faced with costly train journeys, high petrol costs and punitive parking.

Consumers have grown savvy and demanding. They are now less shy about bargaining and making offers. Prices will be slashed especially in fashion and electrical items.

Another worry for the multiples is the growing trend among consumers to save their money until the sales begin. There’ll be plenty of bargains this Christmas and there are certain to be more casualties among the familiar names which dominate the high street.

Initial Reaction from The Letting Site to The Rates Cut

The biggest cut since 1981. But is it too much and too late? One wonders if Gordon Brown regrets giving independence to the Bank of England.

There seems little doubt he and Chancellor Darling would have cuts rates weeks ago – just as America did. But his hands were tied – and he’d tied them himself.

The Bank of England has been ‘behind the curve.’ It hasn’t responded swiftly enough to the tumult. As Richard Lambert of the CBI says the economy is going downhill fast.

First reaction from the Stock Exchange in London and elsewhere around the world is not encouraging.

Even a cut as deep as this – given the innate conservatism of the Bank of England this is the starkest warning about how deep and dangerous the recession is going to get – has failed to bolster confidence. There is a profound fear in the markets now that it will take much more than slashing interest rates to avert a slump.

Inflation is a hydra-headed creature and its box has now been opened – well and truly. But fighting inflation has had to take second place in what has become a fire-fighting agenda if Britain’s economy is to stand a cat’s chance of being able to weather the storm. Growth turning into recession is now the immediate concern.

It is essential that the banks pass on the cuts to existing mortgagees and those seeking new mortgages and to businesses big and small trying to finance their companies.Debt refinancing for major corporations is a huge problem if turnover, sales and profit plunge.

Great pit props of the economy – cars ( sales down 23%) have taken a mighty hit because of the crisis and through a combined attack by government and the Green lobby. Construction, property, the service sector, all need funding at a proper rate.

The banks have behaved abominably in the past weeks. This is a chance to redeem themselves, to start think about the national interest as well as the blackness of their bottom line. It’s vital, as well, that the inter-bank lending rate falls to sensible levels.

No wonder Alistair Darling has – at last – begun to wave the big stick at the banks. It’s a chance for him too to pick up a few points. His super-calm personae is beginning to look about as convincing as the ‘don’t panic’ attitude of the conductor of the orchestra on the Titanic. We’re now promised he’s going to get really cross with the bankers.

But the bankers have been brazen and hard-nosed. And a growing number of people have been saying that Darling getting in a paddy with them is like being savaged by a dead sheep. It seems unlikely that many will be shaking in their well-polished Church’s.

Next year – 2009 – will be financially bloody. But slashing rates to a level not seen since 1954 is stark and dramatic and should give a fillip – let’s hope it lasts – to consumer spending and to that priceless commodity in any economy. It’s called confidence.

Big though it is this cut is unlikely to be the last. More should be coming through. Economists are talking of getting interest rates down to a big fat zero. Some might say Hail the day! But if it comes about the ramifications of that are too great to contemplate.

Politics and French Property

With an increase in the numbers of people wishing to abandon Britain because of the crisis and high-tail it to such places as France – lazing on the Riviera or tending vines in Burgundy – one wonders how the French property market will fare in the global turmoil.

Given the current nasty case of sterling-droop you will not be able to buy as much as before, unless the vendor is desperate to sell. And he probably will be. France brims with vast wrecks which need a fortune and will cost a bomb to run. Their owners have been desperate to sell for years but they haven’t been able to find anybody mug enough.

With sterling’s decline you’ll have to be content with buying just one crumbling chateau rather than two or three. It’ll probably be stuck in the middle of nowhere but what’s a thousand acres of mud to buyers of an insanely romantic bent? You might strike a good deal given that your chosen manoir has probably been on the market since Louis the 14th.

If you are thinking of doing a runner to France it would be wise to keep a close eye on the overall state of the economy and the extraordinary things which are happening to it.

When one looks at the dire state of the French economy – for years it’s been a joke in economic circles – it does seem oddly ironic that President Sarkozy has instructed the banks that if they do not stop behaving badly and begin lending again at sensible rates he will not hesitate to sack their management and bring them wholly under state governance.

Such actions are being mulled over by British politicians – and they are not all members of the far Left – who have lately been watching Sarkozy’s moves with great interest.

The French missed out on the Thatcher revolution. While self-serving trade unions,
over-manning and constant strikes in Britain were addressed and dealt with by the Iron Lady, such shenanighans continued to be tolerated by the French.

Then Sarkozy came to power selling himself as a pint-sized Thatcher: free enterprise was to be encouraged, the French economy freed up, liberated from the bind-weed of excessive trade union power; wild over-manning and restrictive practices would have to cease; national debt would be cut, state services pruned, the high tax regime reformed.

Sarkozy has had to moderate his tune because of recent global calamities. But his platform still makes for a curious mix: a politician elected on a strident free-enterprise ticket, intriguing in itself as France was – and many feel still is – fundamentally, in its marrow, a Socialist society – who is now toying with policies advocated by the Left.

So if you are thinking of becoming a householder in France take care and be inquiring. French red tape is still a nightmare. The tax system is still waiting for reform. Under Sarkozy reforms will happen if he’s given a fair chance. But like other leaders in Europe his hands are rather full at the moment trying to ensure the whole ship stays afloat.

If you want to start a business – say a bed and breakfast or converting a barn into a letting gite (wow! that’s original) or flogging property to fellow Brits (probably a bit of a dead loss in this climate) be warned. Talk to anybody who’s set up in France and most say the authorities treated them like aliens until their commercial and tax status was recognised.

There’s still something in the French character that feels people who want to be entrepreneurial and outside the provisions of state pensions and benefits are dodgy.
They don’t mean any real harm by it (though there is anti-British feeling in places colonised by Brits; the Dordogne springs to mind) It’s more to do, one suspects, with that innate sense of Socialism in France which still makes it quite different to Britain.

If Leftism could be applied in French finance – could it also, perhaps, be applied to property and its taxation? After all, that would only be reverting to France’s true political colours – and it would be ingenuous to think that the present crisis has not caused a serious second-look in France, Britain and elsewhere, at the ideologies of the Left.

The French as a nation have always been ‘political.’ It goes right back to the Revolution. They really care. Frenchmen – and not only intellectuals and intelligentsia - will sit and argue about politics for hours. All those little eateries in Paris, in Montmartre for instance, are abuzz with Sarkozy and his endeavours – and the effect Obama’s victory will have on French-American relationships in particular, and on the world in general.

Sweeping gains by Obama in the House of Representatives suggest that if not Leftism – certainly Liberalism – is back on the agenda with a bang. For British people imagining that life in France would be all best Burgundy and baguettes such profound changes in thinking and in the international psyche have taken on a new and vigorous pertinence.

Crabby Abbey Mars Obama UK Property Boost

On the day Obama makes history in the US – likely to give a fillip to global property prices - Britain’s second biggest mortgage lender, the Abbey, spits in the eye of the government and the taxpayer by raising its rates by half a point. It’s done so just before rates are expected to be cut by the Bank of England.

It’s a highly cynical move which has caused outrage. If the Bank of England does cut rates – and it’s under immense pressure to do so - it means the cuts will be cancelled out and the Abbey will not pass on any benefits to the people who have saved it, British taxpayers, who recently bailed out the banks for more than $37bn.

Such behaviour can only add to the uncertainty which grips the UK property market. There are now conflicting reports about the state of the property rental market in London which further confuse what is already a volatile and quixotic picture.

The excitement and sense of expectation triggered by Obama’s victory is likely to give a fillip to the American property market. It was hoped that it would also help to spread confidence throughout the UK residential and commercial property sector.

But the blatant self-seeking in Abbey’s move will probably quench such hopes. It will antagonise a growing lobby which believes the banks should have been taken into wholesale public ownership and that the recent part-nationalisation, which depends for its success on the bankers displaying goodwill and support, can never work in the way in which Prime Minister Brown and Chancellor Darling had expected.

The clamour for Whitehall to be more dictatorial with the banks is reaching crescendo levels. It is axial that the banks start offering a range of flexible mortgages at attractive rates; that they start showing a little compassion to householders and businesses and stop their glint-eyed level of repossessions; and that they start offering competitive loans to businesses and cease pulling the plug on them with such heartless ferocity.

In the meantime it is still of importance to everybody involved in the property market that several recent reports suggest demand for rental properties in Britain – especially those in London – is actually quite robust and growing.

This is partly because the mortgage freeze continues – exemplified by the Abbey and its conduct – repossessions are gathering pace as unemployment bites, and those with funding are opting to rent, biding their time, waiting for a bargain, before rushing to buy.

That’s one view. Other reports suggest a contrary scenario. They claim the number of properties available is outstripping demand. That tenants are spoiled for choice with a surplus of properties on the market and that consequently rents are beginning to tail off.

This is possible, perhaps, if hard-pressed developers are off-loading new properties at knock-down prices. Or if buy-to-let landlords are giving up the ghost and selling because they can’t secure competitive mortgage rates and a proper return on their outlay.

For landlords that would be a bleak outlook. But it’s not necessarily true. Few properties of any type are actually being sold. So if buy-to-letters are quitting their properties are likely to be stagnating on agents’ books rather than being sold or having much effect on the market beyond tightening it up.

And any shrinking or tightening of the market is good news for those landlords who can stick it out and endure the pain. The smaller the rental market the more valuable those properties which remain will become, in terms of capital appreciation and rental returns.

There’s little doubt that serious investors – those with funding and nerve – are becoming very active in the rental property market. It’s at times like these that they can build portfolios which are cheap now but which will be worth a fortune in the future.

A factor acting as a brake is the uncertainty about if and when the bottom of the market has been reached. Nobody wants to snap up what looks like a bargain today which turns out to be a turkey tomorrow. Calling the bottom of any market is never easy.

But even in this market fundamentals in London still apply. There is always a demand from tenants for flats with good transport links which can be rented at a sensible price.

These are golden rules for landlords. Crises may come and go but they don’t change. Perhaps landlords at the very top end of the renting market will be squeezed. It depends how many top earners lose their jobs in places like Canary Wharf and the Square Mile.

But most tenants live in ‘standard’ flats in London. They are in the majority and they are not the City’s front-line glamour-boys. They work in the back offices away from the limelight earning reasonable wages and expecting to pay sensible rents.

Such people are not those Masters of the Universe who bought estates in the shires and rented penthouses in Mayfair. In times of unemployment it’s the ‘little people’ who are generally – not always, of course – who are marginally safer than the high rollers. And there will always be an abundance of ‘little people’ needing somewhere to live.

London is London. As one of the great capitals it constantly reinvents itself and its population continues to grow. The key word for landlords is ‘sensible.’ It might not mean exciting. But who cares? Landlords have had enough excitement to last a lifetime.

To reiterate: there will always be demand for sensible flats in sensible areas to rent at sensible prices from a swelling army of people earning sensible amounts of money. And it’s these folk who sensible landlords have always depended on and catered for

Landlords also know that historically property has always bounced back – no matter how far it falls - and that they will, one day, enjoy capital appreciation on their portfolios.
Nobody can say how long it will take. But as sure as eggs is eggs it will happen.

With prices in the US beginning to stabilise – as the market finds its own equilibrium - there is now a flicker of hope that property in Britain will steady and begin to pick up. But it’s not helped by the sort of behaviour in which the Abbey has just indulged.

It is critical banks and mortgage companies do their bit. They have to think about what is in the public and the national interest. It’s no longer all about their balance sheets.

They have been saved, they owe their living, their continued existence, to the people, the taxpayers. There is a palpable sense of frustration and impatience with their behaviour. And it really is about time that they began to understand that.

If things turn much nastier for the ‘little people,’ including buy-to-let landlords who have been given a kicking and who are vital in supplying the accommodation which is beyond the wit of government, the men of usury would do well to look to the pages of history.

They should remember cataclysmic events of the past which were fired, in part, by brazen and hard-faced bankers who behaved high-handedly, who ignored public opinion and who became out of step with popular thinking. They would be wise to recall the maxim: What the people give .. the people can take away. That was not Keynes. It was Lenin.

Obama Victory Good for UK Property

British residential and commercial property prices could be boosted by an Obama victory in the US. It would trigger a number of radical changes in economic policy in America where some of the latest reports suggest that house prices are returning to normal.

Any new confidence which sweeps through the US – and the swift implementation of several economy-boosting policies – is certain to be reflected in the British market.
Obama is likely to install a new Treasury Secretary immediately – the international crisis is such that he cannot wait around until late January when he takes over as President.

Some contenders for one of the most axial jobs in finance are highly regarded – such as Paul Volker, a previous chairman of the Fed. The simple act of changing the guards – installing new energy and fresh thinking – will all contribute to giving a much needed bounce to Britain’s economy and especially to its hard-pressed property sector.

Though house prices in the US are reportedly stabilising at previous levels – Obama is not shy of embracing Keynsian thinking. He is pledged to massive injections of money into big infrastructure projects such as roads, schools and bridges. This should help the beleaguered construction industry.

He also wants to try and inject money into the car industry – central to the world economy – and to stop General Motors going bankrupt. He will probably try and facilitate its merger with the Chrysler corporation.

As for the banks - it’s a fair bet that if they don’t start lending again at sensible levels Obama will impose punitive tax regimes or other types of regulation.

US banks have been bailed out with $700bn of public money and American taxpayers are not afraid of asking where their money is going and what they will get out the deal. There is considerable disquiet in America – as in Britain and the rest of Europe – about the hard-nosed and cavalier attitude the banks have adopted since they were saved.

This leads on to another area of reform – and regulators in Britain who face the same problem will be watching carefully to see how Obama and his team handle it – which is how to deal with bonuses and the continuing practise of rewarding people for failure.

Obama supporters expect him to act decisively with banks who won’t toe the line. His government will cajole, to employ a euphemism, those bankers seen to be acting in a hard-nosed way with mortgagees and businesses who have been hit by the credit crisis.

All economies are now linked one to another. China has been heralded as the new economic dragon. So it will be. But currently America is still the power-house and whatever its political and financial leaders decide will inevitably have global repercussions. Few nations are as closely tied to the fortunes of the US as Great Britain.

The old adage is that if America gets a cold then Britain catches pneumonia. Economically speaking, that’s never been more true than in the past few months.

But it’s possible that if America has a heat-wave – admittedly that still looks some way off - Britain might pick up something of a tan. Maybe that’s being a touch optimistic, but in such dark and gloomy times one has to look for the odd ray of sunshine.

Look after the Buy-to-Let Landlords

The government seems to have forgotten the importance of buy-to-let landlords. And yet they’re vital to the well being of Britain and its economy.

At long last Premier Brown and Chancellor Darling – the Tweedledum and Tweedledee of British finance - are getting tough with the banks and telling them that they must start honouring their side of the £35 billion bargain that’s been struck with tax payers money.

They are demanding that they start lending again to little businesses – the lifeblood of the nation - and start offering attractive mortgage deals to people whose existing deals are coming to an end or who are first-time buyers and keen to get on the housing ladder.

And it’s about time too. How any government could conduct such a bail out without attaching strings which are in the public’s interest – rather than the bank’s – defies belief.

The City and its cohorts were going bust. They have been saved with our money – taxpayers money. They owe us, the nation, everything.

Investment bankers and hedge funders have shown themselves to be shockingly brazen. In the UK, Europe and America they are now derided as pariahs.

The British government has no choice but to wield the big stick.

As well as small enterprises and first-time mortgagees the third group which needs to be cherished are Britain’s buy-to-let landlords.

The government’s house building programme is way behind schedule. Many big housebuilders and developers are now looking at bankruptcy.

It’s only private landlords who have property to let who can help to get the government out of the accommodation black-hole. Buy- to- let landlords are the ones who going to make up the accommodation shortfall. And as such they deserve proper support.

This should be in the form of very low interest cut price mortgage deals and tax cuts on any margins they might be fortunate enough to make.

Brown et al – in their Whitehall bubbles - don’t seem to realise just how risky a business buy-to-let has become.

First of all a buy-to-let landlord has to find a big deposit for a venture.

Then he will have to fork out a considerable sum of money to convert it if it’s not a purpose built property.

Then he will have to satisfy himself that he doesn’t mind having his capital tied up on a long term basis.

Before all that he will have had to negotiate through the planning minefield. Dealing with recalcitrant and arbitrary planning authorities can be a nightmare.

This is also an area where central government should intervene.

Planners should be instructed by government that they must fast track applications, for instance, for one-bedroom flat conversions, for which there is a tremendous demand.

Too often councils say: ‘ We’ve had a change of thinking. We don’t see this area as a place of bed-sits and one-bedders. We now want to encourage families into the area.’

It’s all well and good. But the truth is that the horse bolted a long time ago.

Urban areas – especially in London - primarily attract singles and young married couples. They like the convenience and buzz of city life. They don’t mind the noise, the dirt and the menace. But older, more mature families, fled for the country aeons ago.

And because some flippety gibbet in a planning department says ‘ We want to revitalise the area with families..’ well, sorry, but it’s time they got real.

Social engineering rarely works. And it certainly doesn’t happen overnight. If it works at all it takes generations. And the planners might not have noticed but we have a really rather serious housing problem right now.

Apart from anything else, three and four bedroom properties are generally more difficult to let than one-bedders. One reason, of course, is that they’re usually more expensive for the tenants to rent and to run. And they’re often more costly for the landlord to build.

So why should a landlord go to the expense and hassle – and risk his capital – in finding and converting a buy-to-let which is difficult to rent out because a council insists that such properties have more bedrooms than most putative tenants want?

In this exceedingly perilous climate such council and planning dictates are verging on the insane. All attempts by local councils and planning departments to impose social engineering or enforce political theories should be scrapped by central government.

After all the heartache and angst and hassle the buy-to-let landlord might just make sufficient return on his capital to cover the cost of his mortgage ( if he’s lucky).

And that’s why cheap, flexible, buy-to-let mortgages are vital. Without them the buy-to-let market could dry up. And if that happens the housing and accommodation situation will be in an unrecognisably worse state than it is now.

Today there is not, even, the incentive of rising property prices to encourage the buy-to-let landlord. The days when a landlord could say ‘Ah well finding tenants is getting sticky so I’ll sell up and make a profit’ are long gone. It would be interesting to know how many buy-to-let landlords are today in negative equity with their properties.

Many people only became buy-to-let landlords because Brown and co wrecked their pension plans and they were effectively forced in to having to make alternative provision for their retirement years. But that, of course, is an entirely different story …